Executive Summary
Revenue Analysis
- As the “Resource Availability Rate” decreases, total revenue also
declines at an increasing amount (additional 830 million - 1200 million
for every 10% reduction in resource availability)
- On average, revenue decreases by an additional 4% for each 10% drop
in resource availability.
- When resource availability falls to 60%, revenue is 70% compared to
one under full resource availability condition.
- This pattern is consistently observed at regional level
- Statistical analysis of the solution set for each resource
availability rate reveals greater variation in outcomes under more
severe resource shortage scenarios. (Definition: a solution set is the
set of solution that contains all pairs of e1 and e2)
- This behavior in total revenue suggests the model’s increased
sensitivity to “equitable” constraints (e1, e2) when resources are
limited. Specifically, under conditions of limited resource
availability, the “default” gap in treatment opportunities among and
within cluster is higher, which lead to a more diverse set of outcome
when e1 and e2 are reduced. From OR standpoint, equitable constraints
are more likely to become model’s binding constraints when the resource
availability is low.
Treatment Opportunity
Analysis
- the lower fulfillment, more sensitive with equity constraint
(binding) –> also relvevant to revenue
- A deeper analysis on treatment opportunity confirmed the hypothesis
in revenue analysis about model sensitivity to equitable constraints.
Additionally, the resource shortage condition has stronger effect on
cluster 1 and cluster 2 as these are cluster with lower revenue per
resource consumed. In specific, under limited resource and revenue
maximization goal, the model will prioritize to maintain high treatment
opportunity for higher-revenue clusters (cluster 3 - cluster 6) and
allocate remaining resource to lower-revenue clusters (cluster 1 and
cluster 2). While the resource amount allocated to higher-revenue
clusters remains stable, the variation in resource capacity will
directly lead to the variation in the amount of “remaining resource”
available for lower-revenue clusters, then the treatment opportunity for
these clusters.
- According to the figure, the variation in the outcome of
lower-revenue clusters starts appearing at resource availability rate =
0.85 while the variation in the outcome of higher-revenue ones happens
from resource availability rate = 0.75 - where the resources for
lower-revenue cannot significantly reduce further, due to the equitable
constraints among clusters.
Opportunities Cost for
Equitable Healthcare
- This analysis brings new perspectives on equitable healthcare
implementation. The figure illustrates the cumulative revenue loss
attributed to reduced resource availability and the impact of target
inequity among clusters. Generally, a lower resource availability rate
and lower e1 correlates with a sharper revenue decline, which is
depicted as a darker blue triangle in the upper portion of the heat map.
Beyond the findings from previous analyses regarding the relationship
between revenue and the e1 constraint, this section highlights that
within the same e1 value, revenue loss is higher as resource shortages
become more severe. In case-mix planning, for the same e1, hospital can
consider investing for capacity expansion and accept lower revenue loss.
Though opportunity cost paid for equitable healthcare access in this
case does not reduce compared to the situation where hospital accept the
whole revenue loss without making investment, the hospital and society
can yield higher gain through greater revenue and higher treatment
opportunity.
- Furthermore, this analytical approach, when combined with the costs
of healthcare infrastructure, can lay the groundwork for a comprehensive
cost-benefit analysis on capacity expansion to promote equitable
healthcare access
- A similar pattern can be seen in analysis within clusters.
#
Treatment Opportunity Analysis ## Among Clusters
- This analysis provides a deeper perspective on the insights
presented in the “Treatment Opportunity Analysis” section of the
Executive Summary. When target inequity among clusters is high (e1 >
0.6), the reduction in resource availability significantly impacts
lower-revenue clusters. Conversely, at lower levels of e1, where the
treatment opportunity gap among clusters is more constrained, the burden
of resource shortages is distributed more evenly, affecting
higher-revenue clusters as well.
Within Cluster
- The figure illustrates the evolution of treatment opportunity gaps
between classes within clusters under various resource availability
scenarios. The chart reveals significant within-cluster gaps in both
Cluster 1 and Cluster 2. Specifically, Cluster 1 exhibits the largest
treatment opportunity gap when the resource availability rate is ≥ 0.8,
whereas Cluster 2 takes the lead in this gap when the resource
availability rate drops to ≤ 0.7.
- This figure aims to explore further the aforementioned pattern.
- For resource availability rates of ≥ 0.8, where there is sufficient
capacity to maintain high treatment opportunities in Clusters 2 through
6, the primary dynamics occur in Cluster 1, the most disadvantaged
cluster. Within Cluster 1, limited resources are prioritized to meet the
demand from DRGs with Above-Fitted-Value Revenue, resulting in a
significant within-cluster gap. As the resource availability rate
decreases further, this within-cluster gap narrows because the treatment
opportunities for most DRGs in this cluster have already become very
low.
- When the resource availability rate drops to ≤ 0.7, the model is
constrained by the need to maintain target treatment equity among
clusters, preventing a significant reduction in Cluster 1’s treatment
opportunity. As a result, the second most disadvantaged cluster, Cluster
2, begins to be affected. The same principles apply here: under limited
resource conditions, the model prioritizes maintaining high treatment
opportunities for DRGs with Above-Fitted-Value Revenue, leaving minimal
resources for others, which increases the gap in treatment opportunities
between these two classes.